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Deutsche Bank Revises 2012 Profit - Analyst Blog

Mounting litigation overhangs compelled
Deutsche Bank AG
(
DB
) to revise its reported profit figures for 2012. In view of the
rising lawsuit related expenses, the company has come up with
safety measures in order to cushion itself.

Deutsche Bank enhanced its provisions for litigations by EUR 0.6
billion ($0.8 billion) to EUR 2.4 billion ($3.1 billion). Some of
the provisions are associated with claims which were formerly
announced as contingent liabilities. Due to this, Deutsche Bank's
contingent liabilities for relevant legal and regulatory issues
lessened by an approximate EUR 0.5 billion ($0.6 billion) to EUR
1.5 billion ($1.9 billion).

In late 2010, banks that help set interbank lending rates came
under the scrutiny of investigation commissions due to their
suspected involvement in the manipulation of the London Interbank
Offered Rate (LIBOR). Many global banks, which included Deutsche
Bank,
UBS AG
(
UBS
),
Barclays PLC
(
BCS
) and
The Royal Bank of Scotland Group plc
(
RBS
), encountered regulatory probes.

On completion of the investigation, UBS and Barclays had to pay
about $2 billion towards the settlement of manipulation
allegations. On the other hand, Royal Bank of Scotland has been
slapped with a fine of $612 million.

Following this verdict by the investigation commission, Deutsche
Bank anticipates the payment of similar settlement money worth
billions of dollars. In order to shield itself against any crisis
which might arise due to its involvement in the LIBOR
manipulation, Deutsche Bank took steps to harden its legal
provisions.

These steps are expected to protect Deutsche Bank against any
further setbacks which it might face due to the abovementioned
litigation charges.

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